Holding extractive companies liable for human rights abuses committed abroad

December 07, 2020

By Professor Elizabeth Steyn 

In the last days of November 2020, the Swiss nation voted on a referendum question with high stakes for industry: the passing of a law intent on rendering Swiss businesses liable for human rights abuses or environmental damage abroad. More specifically, the Responsible Business Initiative (RBI) would have made it possible for foreign nationals to sue Swiss companies in Swiss courts for the conduct of their subsidiaries abroad.[1]

Given that Switzerland is a world centre for commodity trading and home to industry giants such as Glencore Mining, Nestlé and Novartis, this was not a quest without potential sting. Indeed, it had previously been rejected by the Swiss government and both houses of parliament. The rejection of the RBI means that a milder alternative measure automatically will take effect. Although it also targets transparency and due diligence reporting –notably in the event of child labour and the sourcing of minerals from conflict areas– it is relatively toothless in that it does not contain a liability clause.

A notable driver in the movement towards stronger oversight has been allegations of abuses committed in the extractive sector. Indeed, The Business & Human Rights Resource Centre’s latest Transition Minerals Tracker (May 2020) features Glencore as a top 5 company in respect of 4 out of 6 transitional commodities (cobalt, copper, nickel and zinc) and records allegations of human rights abuses in three of these categories: cobalt (10 allegations[2]); copper (32) and zinc (14). While the copper and zinc allegations against Glencore are roughly double in number to those of its nearest competitor, it ties with the DRC state mining company, Gécamines, in respect of cobalt related human rights allegations. In unrelated news, Glencore fought unsuccessfully last week to obtain a gagging injunction pertaining to allegations of child labour made against it by the organization Initiatives multinationales responsableswith reference to its Bolivian mine in Porco.

On November 29, 2020, 50.7% of the national vote went in favour of the RBI; however, it gained a majority vote in only a third of the Swiss cantons.[3] Observers have pointed out that this is the first time in 50 years for a referendum measure to flounder due to regional restrictions despite having attracted a nationwide popular majority.

The outcome of the referendum is thus that the Swiss Responsible Business Initiative will not come into being. However, the fact that it carried the popular vote has been described as, “a clear sign to Switzerland's multinationals that the days of avoiding scrutiny are well and truly over.”[4]

This is in line with developments elsewhere in the world.

In Vedanta Resources Plc & Anor v Lungowe & Ors[5] the UK Supreme Court held in 2019 in a procedural ruling that pollution charges could proceed in the UK against Vedanta Resources, plc (“Vedenta”) and its Zambian subsidiary, Konkola Copper Mines, plc (“KCM”), notwithstanding the fact that the pollution was alleged to have taken place in Zambia and that the claimants were a Zambian community. The facts relate to the operations of the Nchanga Copper Mine in the Chingola District of Zambia.

This full-bench decision is interesting for multiple reasons. First, it is a significant ruling for multinational UK parent companies with subsidiaries operating in developing countries.[6] Second, both Vedanta and KCM had explicitly submitted to the jurisdiction of the Zambian courts.[7] Third, although most of the proper place indicators pointed to Zambia[8] and despite the fact that the Court found that there would be a real risk of irreconcilable judgments between Zambia and the UK,[9] it still ruled that the UK had jurisdiction to hear the case on the basis that the claimants were likely to suffer a substantial injustice if the matter were to proceed in Zambia. Interestingly, no criticism was levied against either the administration of justice in Zambia or its legal system.[10] Instead, the Court held that by reason of their extreme poverty the claimants would not be able to afford funding the litigation in Zambia and that they would not be able to access a Zambian legal team of sufficient expertise, experience and resources to pursue such litigation in Zambia.[11] In other words, it became an issue where access to justice considerations trumped strict procedure.

All of this is relevant in the Canadian context. In a recent Blog I addressed the settlement of the litigation in Nevsun v Araya.[12] Of great importance remains the fact that in February 2020 the Supreme Court of Canada has in this litigation categorically opened the way for foreign plaintiffs to bring allegations in Canadian courts of human rights abuses perpetrated by foreign subsidiaries of Canadian mining companies. While the Supreme Court made no ruling on the substance of the charges given the preliminary nature of the proceedings, future plaintiffs certainly will get to address the substance of their claim far sooner. As this note has illustrated, Canada is in step with leading business and human rights developments on the international front. That is cause for celebration.

[1] Bearing in mind that Switzerland is a civil law jurisdiction, a right to access to the courts along the lines of that upheld in Nevsun v Araya Resources 2020 SCC 5 would be unlikely.

[2] Note that one allegation may relate to multiple issues.

[3] The “Yes” vote fell short by a few thousand votes. In the end, 8.5 out of 26 cantons voted in favour. It should be noted that the votes in favour were mostly urban-based, whereas the cantons usually have both urban and rural constituents. See “Schweizer Konzernverantwortungs-Initiative erreicht Mehrheit bei Gesamtstimmen, scheitert aber am Ständemehr” (30 November 2020) Business & Human Rights Resource Centre, online < https://www.business-humanrights.org/de/neuste-meldungen/schweizer-konzern-verantwortungsinitiative-volksabstimmung-am-29-november/?utm_source=Business+%26+Human+Rights+Resource+Centre+Updates&utm_campaign=6d923776f3-EMAIL_CAMPAIGN_2020_11_26_01_48&utm_medium=email&utm_term=0_c0049647eb-6d923776f3-182141817&mc_cid=6d923776f3&mc_eid=b2ede7365c>.

[4] Imogen Foulkes, “Sign of Relief for Business Leaders for Now”, (BBC News, Switzerland: 30 November 2020), online <https://www.bbc.co.uk/news/world-europe-55122172>.

[5] [2019] UKSC 20.

[6] See UK Supreme Court Blog, “Case Comment: Vedanta Resources Plc & Anor v Lungowe & Ors [2019] UKSC 20” (29 April 2019), online <http://ukscblog.com/case-comment-vedanta-resources-plc-anor-v-lungowe-ors-2019-uksc-20/> .

[7] Vedanta Resources, supra n 5 at para 85.

[8] Ibid at para 71.

[9] Ibid at para 82.

[10] Ibid at para 89.

[11] Ibid at paras 89–101.

[12] Supra, note 1. Also see Elizabeth Steyn, “Slavery Charges against Canadian Mining Company Settled on the Sly” (26 October 2020) The Conversation, online < https://theconversation.com/slavery-charges-against-canadian-mining-company-settled-on-the-sly-148605> .